Saving to buy not a priority for 82% of non-homeowners

Saving to buy not a priority for 82% of non-homeowners; Base rate holds at 0.75%; landlords contribute £3.61bn to local economies; EPC minimum standards deadline delayed in Scotland;
Tortoise inside shell

Data from global bank, ING International, has found that, due to the financial inaccessibility of buying property, saving to buy is not a priority for the majority of Britons.

Furthermore, 39% of renters who have never owned property do not expect to be able to at any point in their lives.

Jessica Exton, behavioural scientist at ING, commented on the findings:

“Lots of us want to own our own home one day. Not only because it’s considered to be a smart financial decision, but because home ownership is an emotional and personal goal.

“But because property is so expensive – and there is a perception it will become more expensive – people are taking longer to save for a deposit and buying later in life.”

Data from the 2018-19 English Housing Survey (EHS) shows that, whilst the average age of first time buyers is unchanged from the previous year, at 33 years, the number of first time buyers declined by over 7% from 727,000 to 785,000.

The EHS also demonstrates that the number of families, reliant on the private rental sector for housing, has grown significantly over the last decade.

In 2008-09 the proportion of families renting property was 30%. In the most recent 2018-19 survey this had jumped up to 37%.

EHS data saw an even greater proportion of private renters declare that they do not expect to buy property than the ING data.

In the 2018-19 EHS, participants were asked whether they expected to buy property at some point in the future. 56% said yes, which leaves 44% who do not.

Of those private renters who did anticipate buying their own home, 27% believed it would be within 2-years, whereas 41% said it would be within 5-years.

For private landlords, these two sources of data serve to underline that their role remains a vital one.

Bank of England

Base rate holds at 0.75%

The Bank of England (BoE) Base Rate held at 0.75%, in the January 30th vote.

The seven to two vote in favour of keeping the base rate at 0.75% saw the same two members of the Monetary Policy Committee as at the last vote, Jonathan Haskel and Michael Saunders, seek a reduction.

The rest of the Committee secured the majority to retain the status quo.

This vote was Mark Carney’s last as the Governor of the Bank of England.

Whilst the last 3 months of 2019 saw no growth in the economy, the MPC highlighted that global growth has stabilised, global business confidence has picked up and, in the UK, and “near-term uncertainties facing businesses and households have receded.”

Looking to the future, the committee expects more of the same. If that happens, the decision to make a small increase to the base rate may be made, but if this were to happen, the time-frame of change is expected to be over a few years.

If the opposite were to occur, then there is the opportunity to reduce interest rates.

Inflation of 2% remains the target. It is currently below that and is expected to remain so for the rest of 2020, however, change is expected beyond that point.

Landlord’s £3.61bn contribution to local economies

Local tradespeople are the choice for 81% of UK landlords, resulting in over three and a half billion pounds being spent in local communities. These findings come from a new report by Aldermore Bank.

Of the 1,000 landlords surveyed, 90% said their reliance on local services would either be maintained, or grow, through this year.

The primary driver for landlords to use people within local communities was found to be trust, cited by 39% of those surveyed.

A quarter of landlords highlighted that their rental property was not in the vicinity of their residential property, so it was reassuring to use local tradespeople.

The distribution of spend, on local services, was most significant across 12 professions.

Understandably, the profession landlords spend the most on is letting agent or property management services. This comprised an annual spend of £879.9 million.

In terms of spend, handy-workers, plumbers, electricians and cleaners made up the top five professions that landlords invest in most.

Aldermore landlord spend

Source: “Landlord expenditure on local services in the past 12 months” Aldermore Bank

When looking at the percentage of landlords who made use of each given profession in the last year, builders switched into the top five and cleaners dropped into sixth place.

A third of landlords surveyed also referenced that they work with local people so as to support their local economy. A quarter said that when balancing the books, local services tend to be cheaper than alternatives.

Delay to EPC minimum standards in Scotland

The Scottish government has imposed a 6-month delay on the deadline for achieving minimum energy standards, in rental properties in Scotland.

The original deadline was set for 1st April 2020, but is now 1st October 2020.

The chief executive of the Scottish Association of Landlords, John Blackwood, welcomed the news:

“The change in the timetable for landlords to improve energy efficiency standards is a sensible one, and we are also very keen to see the correct level of support for landlords to achieve these challenging goals.

“It is only proper that tenants in Scotland have the reassurance of knowing that their properties are energy efficient, their bills are reduced and that their landlord is helping to tackle the climate emergency. We are pleased that the government is allowing more time to get this initiative right.”

The revised timetable for Scottish landlords means that the following deadlines will be imposed:

1st October 2020

Rental properties must meet minimum EPC rating of E at change of tenancy

31st March 2022

ALL rental properties must meet minimum EPC rating of E

1st April 2022

Rental properties must meet minimum EPC rating of D at change of tenancy

31st March 2025

ALL rental properties must meet minimum EPC rating of D

The objective for the minimum energy efficiency standards is to improve housing stock, reduce utilities costs for tenants and contribute to work to tackle the climate emergency.

At present, the timetable for landlords in England and Wales remains unchanged.

1st April 2020 is still the deadline for landlords to get their properties up to the minimum “E” standard, unless the property is subject to an exemption.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.